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SRG SEES GROWTH POTENTIAL IN GROWING CHINESE AUTO MARKET

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By Rhoda Miel, PLASTICS NEWS STAFF

BEIJING (April 24, 2:15 p.m. ET) --  In 2009 when Guardian Industries Corp. created the auto supply company SRG Global Inc., a small molding facility in Suzhou, China, was part of the global footprint.

At that time, the plant -- acquired by Guardian when it bought the automotive group of Siegel-Robert Inc. -- focused on making parts to export to international automakers, much as the rest of the supply base saw China as a location for low-cost production.

But now China is the world’s largest auto market with 18 million cars sold last year, and carmakers are forecasting potential sales to more than double within 10 years. Some predict the country could sell 40 million cars annually by 2020.

Those are numbers that are hard to ignore, and for companies like SRG they have also meant continual growth.“It’s like the U.S. industrial revolution on crack,” said Jon DeGaynor, vice president of business development and strategy and managing director -- Asia for SRG during an interview at the 2012 Auto China show in Beijing on April 23. “But its not just about volumes at an incredibly rapid growth rate. They expect you to perform to quality standards that are equal to anywhere else in the world.”

Global carmakers want to build a global platform, using a supply base that can deliver consistent quality parts from anywhere in the world. That means that when Ford Motor Co. launches production at its new $760 million manufacturing plant in Hangzhou -- announced just before the Beijing Auto Show -- it wants to make a car there as in Belgium or Michigan.

SRG wants to be one of those key suppliers picked for those global vehicles, so it has focused on technical capabilities in Suzhou to bring it up to the same production level as its other operations in Europe and North America. And it has had to develop those skills among a young Chinese workforce while also adding production to keep up with the pace of growth.“

As we look at adding presses, we have to be cognizant of what else is going on because our customer wants to have parts made to the same standard,” DeGaynor said.

It has expanded the Suzhou operation three times since SRG came into existence. Its 380 employees include only two ex-pats. The rest are all trained in China. And its a young work force, he added. The oldest employee is 47. The plant manager is 43. The bulk of the work force are in their 20s and reflect the new generation of Chinese workers who have advanced production skills.

“We’ve worked hard to develop them to provide the same common standards and meet the same demands as every other facility,” he said.

And it is not only the international automakers who are driving the new emphasis on quality over quantity, noted Tom Schneider, director of marketing. China’s domestic automakers are also pushing for more.“In the past three years, you could see the equivalent of the domestic carmakers moving from a copycat of international car styles to one of developing their own style, their own way of doing things,” he said.

And the increasing Chinese consumer base wants the same quality in vehicles as they would buy anywhere else in the world, Schneider said. The general rule of thumb is that a car buyer may buy the first car just to own a car. But for the second one, they will look at materials and fit and finish.

“Anybody who thinks it’s just about high volumes at low cost is going to miss out,” he said.

SRG specializes in decorative interior and exterior trim, with a focus on chrome and metallic trim. It makes front grilles, body side moldings and other key parts, and can produce those parts anywhere, DeGaynor noted.

As China continues to grow, it is also looking at potential expansion locations in the country. The auto production market is moving beyond its traditional locations near Shanghai and Guangzhou and into central and western China -- just as other industries look to expand to other regions.

Originally appeared online on the Plastics News website: http://plasticsnews.com/headlines2.html?id=25259